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Trading Blog Tuesday (evening), February 27, 2024

2/27/2024

MARKETS UPDATE (6:00 pm EST)

All three of our broad stock market indices (DOW, S&P 500, NASDAQ) made new weekly highs last Friday and are now falling (slightly) from there. Those highs could have been the final tops in the medium-term cycles of all three indices (it was in the center of our current strong reversal zone and the tops are overdue), but this market seems reluctant to fall. Our current reversal zone is in place through Thursday, or even Friday, so there's still time for one, two, or all three indices to push up a bit higher to a new top. (If just one or two make a new high, it would give us a nice bearish divergence signal).

Whether the tops were last Friday or they happen this week, we are expecting a sharp correction down to the final medium-term cycle bottoms in all three indices soon. It is late in these current medium-term cycles, and they have been unusually bullish, but a 2-5 week decline to a final cycle bottom is now due (overdue). We note that the NASDAQ's high last Friday (16,132) did not exceed its all-time high from November 2021 (16,212), so we still have a bearish divergence signal in this market (as the DOW and S&P 500 continue to make new all-time highs). We will remain on the sidelines of this market as we wait for a significant corrective drop to the final medium-term cycle bottoms in all three indices.

We are now in the center of a reversal zone specifically for precious metals (Feb. 21 - 29) that is overlapping with our strong general reversal zone for all markets (Feb. 19 - March 1). Today and tomorrow are also potential "pivot points" for gold. Gold prices went up last week as silver prices fell lower, which is a little unusual as both metals usually move in tandem. This has created a situation where silver is making a low and gold is making a high in the center of these reversal zones. So far, gold has not yet made a new high this week, but silver is making new weekly lows, which technically may be giving us a bullish divergence signal.

It's still not clear whether or not gold and/or silver started new medium-term cycles with their lows on Feb. 14 ($1986 in gold and $21.95 in silver). If they didn't, and we are still looking at older cycles, then those cycles are technically due to end this week with their final bottoms below $1986 in gold and below $22 in silver. There are still three days left in our reversal zones for that to happen. If it doesn't happen and prices rally up, we will have to favor the idea of new cycles starting on Feb. 14. The short-term direction of this market is unclear now as we remain on the sidelines.of both gold and silver.

The U.S. Dollar Index has been falling, and we now enter another reversal zone specifically for currencies (Feb. 28 - March 7). If the dollar turns back up from an isolated low in this time frame, it could push precious metal prices down. We will watch this carefully in conjunction with gold and silver.

Today crude oil prices jumped up to test the $79.09 (April contract chart) high from Jan. 29. Besides being inside our strong general reversal zone, we are also inside an unusually long reversal zone specifically for crude (Feb. 21 - March 13), so a top and significant correction down could happen anytime now. Today's high exceeded last week's highs, so a top could be imminent.

In last Thursday's blog on crude oil I wrote:

"We still don't know if the current medium-term cycle is new (i.e. started on Dec.13) and bullish or an old one (started back on Oct. 6, 2023) that will fall to a final cycle bottom below $68.47 due by the end of this month. If a top forms this week or next, we will wait to see how far any corrective drop will go. A correction that holds above $70 would suggest a new cycle is in place, whereas an older cycle would likely break below $68."

All of this still applies as we wait for a corrective drop and see how far it goes. In the meantime, we remain on the sidelines of crude oil.

Trading Blog Thursday, February 22, 2024

2/22/2024

MARKETS UPDATE (11:33 pm EST)

The amazingly bullish broad stock market continues to push the limits for a final top in its current medium-term cycle. The DOW and S&P 500 had been falling from their Feb. 12 highs which had looked like the overdue final tops in their current medium-term cycles, but today both indices made "gap-ups" above those highs to new all-time highs. We note, however, that even though the NASDAQ also made a significant "gap-up", it did not get above its Feb. 12 high (yet). Even more significantly, the NASDAQ still has not broken above its all-time high (16,212) from Nov. 2021 (although it is very close to doing that if it continues to rally). This means we still have a strong bearish divergence signal between these indices, and it is happening as we approach the center of a very strong reversal zone (February 19 - 29). It is also VERY late in the current medium-term cycles of all three indices, so a final top to these cycles is due (overdue). So despite today's rally, a final top and sharp correction down could still be imminent.

What makes today's rally so bullish is that the "gap-ups" in both the S&P 500 and NASDAQ created a "bullish island reversal" pattern in their charts which means this rally could continue into next week. If that happens, we note that our strong reversal zone continues into next Thursday, so there is still time for a final top to form inside it.

The final BOTTOMS to the current medium-term cycles in all three indices would normally be expected anytime now over the next three to six weeks with the most likely time being in mid-March. We will keep that in mind as we wait for a significant correction into those final bottoms. We remain on the sidelines of this market for now.

As I pointed out in last Thursday's blog on gold and silver, it's possible that gold and/or silver made final medium-term cycle bottoms with their lows on Feb. 14 ($1986 in gold and $21.94 in silver). The only problem with that is Feb. 14 was not in any reversal zone, and we generally like to see significant bottoms (and tops) happen inside a (preferably) strong reversal zone. Gold has been rallying strongly since Feb.14, but prices seem to be floundering now near the 15-day and 45-day moving averages. If this is still an older medium-term cycle (i.e. not a new one starting from Feb. 14), then the final cycle bottom is due by next week - below $1986. A final bottom next week would be ideal because we are currently inside a reversal zone specifically for precious metals (Feb. 21 - 29) that is overlapping with another strong general reversal zone for all markets (Feb. 19 - 29). Furthermore, next Monday is a strong potential "pivot point" for silver, and Tuesday is a strong potential "pivot point" for gold.

Silver rallied a bit more aggressively than gold from its Feb. 14 low ($21.94), but it too is now encountering some resistance around its 45-day moving average. While gold is making a new weekly high today, silver prices have been falling since last Friday's high, so we have bearish divergence between the metals which suggests they both could fall lower. If this is an older medium-term cycle in sliver, its final bottom, like gold, is due by next week. We will stay on the sidelines of both metals for now as we wait to see if prices can move lower into next week. We are still looking to buy both metals near their final medium-term cycle bottoms.

Crude oil prices continue to edge higher as they test the Jan. 29 high of $79.09 (we are now switching to the April contract chart). Because we are now approaching the center of a very strong general reversal zone, any new isolated high could become a top followed by a significant correction down. We still don't know if the current medium-term cycle is new (i.e. started on Dec.13) and bullish or an old one (started back on Oct. 6, 2023) that will fall to a final cycle bottom below $68.47 due by the end of this month. If a top forms this week or next, we will wait to see how far any corrective drop will go. A correction that holds above $70 would suggest a new cycle is in place, whereas an older cycle would likely break below $68. For now, we remain on the sidelines of crude oil, but we still anticipate buying at the bottom of any significant sub-cycle correction.

Trading Blog Thursday (night), February 15, 2024

2/15/2024

MARKETS UPDATE (9:30 pm EST)

It is getting VERY late in the current medium-term cycles of the broad stock market (DOW, S&P 500, NASDAQ). This current cycle is very bullish and continues pushing to new highs. On Monday, all three indices made new weekly highs, but only the DOW and S&P 500 made new all-time highs. The NASDAQ is still below its all-time high of 16,212 from Nov. 2021, but not by much (Monday's high got to 16,080 before closing just below 16,000). This means our bearish divergence signal is holding (for now).

All three indices fell sharply on Tuesday giving the impression that a significant correction was starting, but they snapped back up Wednesday and today, so the rally may not be over yet. Monday's highs were inside a weak reversal zone, so if those highs hold, we could still be headed down to a final medium-term cycle bottom into our next strong reversal zone coming up next week (Feb, 19 - 29). That is our ideal scenario. But if this market continues to rally and breaks above Monday's highs (they are close - especially the DOW and S&P 500), then we may get a final "blow-off" top instead of a bottom in this next reversal zone. In that situation we would almost surely see a final steep correction from the top down to a final medium-term cycle bottom in all three market indices - probably in the first half of March.

For now, we continue to stay on the sidelines as we wait for that bottom (a good buy spot) either in the next 2 weeks or a little later. We are still looking around 37,000 in the DOW and 4,700 in the S&P 500 as good targets for a final bottom. If the market pushes a lot higher into next week, however, we may have to raise those targets a bit.

Both gold and silver made new weekly and yearly lows on Wednesday. As with the broad stock market, It is also late in the medium-term cycles of both these metals, so it's possible those lows were the final medium-term cycle bottoms. The only problem is that Wednesday was not inside any reversal zone, and we like to see significant bottoms or tops in a (preferably) strong reversal zone. Next week we enter two strong reversal zones, one specifically for precious metals (Feb. 21 - 29), and one general reversal zone (Feb. 19 - 29). Let's wait to see if gold and silver can push lower into those time frames. If they rally instead, those reversals could put a curb on the rally and possibly turn it down early. We will watch this closely next week as we would like to buy into the start of any new medium-term cycle. We remain on the sidelines of gold and silver for now.

In last Wednesday's blog on crude oil I wrote:

"We are still not certain if crude oil began a new medium-term cycle with its low of $68.28 (March contract chart) on Dec. 13 or if crude is near the end of an older medium-term cycle that started back on Oct. 5 at $76.93. If it's an older cycle, then it is bearish and prices will go lower and soon (within the next four weeks) form a final bottom below $68.28. But if crude started a new cycle on Dec. 13, it most likely completed its first sub-cycle corrective dip with Monday's $71.41 low and is now starting a rally that will soon test the $80 level."

We are still not certain which medium-term cycle is correct, but because prices have been closing above both the 15-day and 45-day moving averages, I am favoring the idea of a new medium-term cycle starting Dec. 13. If that's the case, prices should continue to rise to test the $80 level soon, but we note that we are about to enter a strong general reversal zone next week, and that could out a damper on any rally. A new high in this reversal time frame could become a top followed by another significant sub-cycle correction, and that might give us a good spot to buy. We will watch for this. If the old medium-term cycle is still in place (Oct. 5 starting point) then we don't expect prices to exceed $80 (or even $79.29), and they should fall back below $70 fairly soon. I don't think this will happen, but we can't rule it out until prices start closing above $80. We are still on the sidelines of crude.

Trading Blog Wednesday, February 7, 2024

2/7/2024

**PLEASE NOTE MY NEW LONG-TERM UPDATE ON THE BROAD STOCK MARKET POSTED ON THE HOME PAGE 2/7/24**

Trading Blog Wednesday (night), February 7, 2024

2/7/2024

BROAD STOCK MARKET and CRUDE OIL UPDATES (9:00 pm EST)

The broad stock market was relatively flat on Monday and Tuesday, but today we saw a significant rally in all three of our market indices (DOW, S&P 500, NASDAQ). The S&P 500 and NASDAQ broke to new weekly highs while the DOW came close but did not. This gives us a bearish divergence signal (but one that could easily be negated tomorrow if this rally continues). We still have another even stronger bearish divergence signal between these indices as the NASDAQ is still below its all-time high from Nov. 2021 (16,212) while the DOW and S&P 500 are well above their previous all-time highs from Jan. 2022. We are also in the center of a relatively weak reversal zone (Feb. 2 - 13) that is being enhanced by a strong potential "pivot point" or turning point for equities that was in effect yesterday and today.

It is VERY late in the current medium-term cycles of all three indices, and their final tops are now due (overdue). A significant correction down should be imminent and could start from today's highs or from any new highs over the next three or four trading days. We are expecting a 2 - 5 week corrective decline that could take the DOW back to the 37,000 level and the S&P 500 close to 4,700. We will watch for these targets as good potential buy spots as we expect this bullish market to continue its rally at least into April, and maybe considerably longer. Our next strong reversal zone is coming up at the end of this month (Feb. 19 - 29), so that would be an ideal time to see a corrective low and the final bottoms to the current medium-term cycles. We will watch for it. We are currently on the sidelines of the broad stock market.

We are still not certain if crude oil began a new medium-term cycle with its low of $68.28 (March contract chart) on Dec. 13 or if crude is near the end of an older medium-term cycle that started back on Oct. 5 at $76.93. If it's an older cycle, then it is bearish and prices will go lower and soon (within the next four weeks) form a final bottom below $68.28. But if crude started a new cycle on Dec. 13, it most likely completed its first sub-cycle corrective dip with Monday's $71.41 low and is now starting a rally that will soon test the $80 level. Prices are now closing above the 45-day moving average, but they are still below the 15-day moving average (which is very close to a strong resistance line at $75). It could go either way here. I would like to see the older cycle play out because that would soon give us a good buy spot at the bottom of the older medium-term cycle (and maybe even the longer-term 4-year cycle). If instead the market rallies and breaks above $80, we will have to wait longer for another significant correction to buy. We are keen to buy crude oil now because we are either at or near the bottom of a longer-term 4-year cycle in crude, and that means we expect a strong rally this year that could challenge or exceed the 2022 high of $130.

Considering all the recent tension and fighting in the Middle East, crude prices have been remarkably stable. But that could change, and we need to be on guard for large and sudden fluctuations in prices (and those moves could be both up and down). We are currently on the sidelines of crude.

Trading Blog Tuesday (late night), February 6, 2024

2/6/2024

UPDATES ON GOLD AND SILVER (11:30 pm EST)

It's getting very late in the medium-term cycle of gold. In fact, there's a possibility it might have ended with the $2003 low on Jan. 17. If that's the case, a new medium-term cycle started from there, and this market should be very bullish. But after breaking above the 15-day and 45-day moving averages last week, prices broke back below those averages yesterday, and this rally from Jan. 17 has been modest (so far). This means the old cycle could still be in place, and prices could move lower to the final cycle bottom due by the end of this month (which would actually be a good time for the final bottom as that would be inside a reversal zone specifically for the precious metals Feb. 21 - 29).

Another major concern we have with gold right now is that we are expecting a longer-term correction in gold that could take prices to $1900 or below, and that could happen anytime between now and July. If we are still in an older medium-term cycle, prices could take that steep drop now. If we already started a new medium-term cycle on Jan. 17, prices could rally a bit first before falling to that longer-term cycle low (if it happens). Either way, we have to be on guard for a significant price drop that could happen soon (older medium-term cycle) or later (new medium-term cycle). Any drop towards the $1900 area would be a good signal to go long - especially if it falls inside a reversal zone - because once that longer-term bottom is in, we expect a very strong rally in gold to exceed the recent all-time high at $2123. Let's wait and see if gold prices can move lower this week. If they can get to $1950 or lower, we may consider buying. If instead prices rally and break above $2100, we will have to assume a new medium-term cycle started Jan. 17, and we'll have to wait a little longer for a good spot to buy. We are on the sidelines of gold for now.

It is also late in the medium-term cycle of silver with its final bottom due anytime by the end of this month. But like gold, silver may have already started a new medium-term cycle from its low of $21.96 on Jan. 22. If it is a new cycle, prices could rally strongly now, but I do not think this is likely. I think prices could go lower from here to form the final bottom of an older medium-term cycle. We have a strong potential "pivot point" for silver coming up Wednesday through Friday, so this would be a good time for a final cycle bottom. A good target for a bottom could be around $21.70 - $22.00. If we see prices there over the next three days, we may look to go long. We are currently on the sidelines of silver.

Trading Blog Sunday (evening), February 4, 2024

2/4/2024

UPDATE ON THE BROAD STOCK MARKET (7:00 pm EST)

Following last Wednesday's FOMC meeting, the broad stock market fell dramatically after Fed Chairman Jerome Powell dampened trader's and investor's hopes of an early interest rate cut. In my blog that day I wrote:

"Today the DOW dropped 317 points, the S&P 500 dropped 79 points, and the NASDAQ fell a whopping 346 points. This looks like the beginning of a fall to the final medium-term cycle bottoms (unless the market snaps back up tomorrow)...we wait to see if today's sell-off can gain more momentum over the next several days."

Well, the market DID snap back up, and by Friday all three market indices (DOW, S&P 500, NASDAQ) were making new highs for the week. This market is very bullish, but the rally and the current medium-term cycles are getting 'long in the tooth", and a final top is now due (overdue). We just left a strong reversal zone, but we are entering another one next week (February 2 - 13). Although this reversal zone is weaker than the previous one, we do have a strong potential "pivot point" for equities Tuesday through Thursday that could give it more strength. We will also watch for more bearish divergence in these indices (i.e. one or two, but not all three making new weekly highs). We note that there is still a strong bearish divergence signal between these three indices as the NASDAQ still has not exceeded its all-time high from Nov. 2021 (16,212) while both the DOW and S&P 500 have exceeded their all-time highs from Jan. 2022. The NASDAQ, however, is now very close to that high. If it does break through, that would be a very bullish signal for this market. We remain on the sidelines of the broad stock market as we wait for a corrective low and the final bottom of the current medium-term cycle.